L&T Finance Holdings' rights issue to open on Feb 1; stock surges 7%

The company has fixed January 22, 2021 as record date to determine the equity shareholders entitled to receive the rights entitlement in the rights issue.

Shares of L&T Finance Holdings were up 7 per cent at Rs 106 on the BSE on Tuesday. The company has fixed January 22, 2021 as record date, for its proposed Rs 3,000-crore rights issue, to determine the equity shareholders entitled to receive the rights entitlement in the rights issue. The stock will turn ex-date for rights issue on Thursday, January 21.

The non-bank lender on Monday said the company's rights issue offer will open on February 1 and will close on February 15. The company has fixed a price of Rs 65 per equity share for the offer and an entitlement ratio at 17:74 (17 equity shares for every 74 shares held in the company.

The board of directors of the company at their meetings held on November 4, 2020, had already approved the offer and issuance of fully paid-up equity shares of the company for an amount not exceeding Rs 3,000 crore by way of a rights issue to the eligible equity shareholders of the Company as on the record date.

As on December 31, 2020, Larsen & Toubro (L&T), the promoter held 63.65 per cent stake in L&T Finance Holdings. Institutional investors held 14.63 per cent holding, followed by individual shareholders (13.68 per cent) and foreign companies (4.77 per cent). Bc Asia Growth Investments and Bc Investments Vi were holding 3.18 per cent and 1.59 per cent stake, respectively, the shareholding pattern data shows.

“For October-December quarter (Q3FY21), the company has reported healthy disbursements at Rs 107 billion (up 12.7 per cent yoy/51 per cent qoq) on the back of a strong recovery in rural and infra segments. However with regularization of repayments, AUM growth remained weak. Combined margins (NIMs + fees) surged to around 739 basis points, backed by a decline in cost of funds and an increase in cross sell activities,” analysts at Emkay Global Financial Services said.

The management preferred to remain cautious on the provisioning front by enhancing ECL provisions in stage 1 and 2 assets while maintaining macro prudential provisions and Covid-19 provisions intact. Total buffer provisions (above GS3 requirement) stand at around 2.4 per cent of AUM, indicating adequately resilient balance sheet, the brokerage firm said with hold rating on the stock.